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Much of the wealth in the MENA region is held directly in the hands of private individuals or through closely-held companies. Recent articles suggest that more than 80 per cent of businesses in the Middle East are family-run or family-owned, with an estimated US$1 trillion expected to be handed down to the next generation within the next five to ten years, and with family businesses controlling over 90 per cent of commercial activity in the region.
With such a high concentration of wealth in private hands, succession planning is one of the most pressing concerns facing Middle Eastern families today. Failure to put appropriate plans in place can result in unanticipated upheavals, family disharmony, significant delay and expense and, ultimately, fragmentation of family wealth. Trusts are playing an increasingly important role in addressing these problems.
The British Virgin Islands (“BVI”) and the Cayman Islands are natural choices for Middle Eastern families to establish a trust. Both of these British Overseas Territories offer a politically stable, tax neutral jurisdiction with a mature common law system, modern trust legislation and highly experienced trust practitioners.
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Flexible succession planning for MENA families using Cayman and BVI trusts